2 Annuity Defined annuity (n.) a specified income payable at stated intervals for a fixed or a contingent period, often for the recipient's life, in consideration of a stipulated premium paid either in prior installment payments or in a single payment.

3 Two basic types of annuities Immediate annuity income stream begins immediately upon payment of the first premium Deferred annuity income stream begins later (or not at all, at the owner s discretion)

5 Fixed deferred traditional annuities Principal guaranteed by the insurer Minimum interest rate guaranteed Current interest rate determined by company board of directors Low risk instrument General obligation of the insurer* *subject to claims of the insurer s s creditors

6 Fixed deferred index annuities Partial or whole principal guaranteed by the insurer A minimum interest rate may be guaranteed Current interest rate determined by a market index Generally more illiquid than a traditional fixed annuity General obligation of the insurer* *subject to claims of the insurer s s creditors

7 Variable Annuities Market based investment without guarantees* A security (must be sold by prospectus) Agents must have both FINRA and state insurance licensing NOT a general obligation of the insurer *certain certain variable annuities offer income guarantees at an additional cost; read the prospectus carefully for details on these income guarantees

8 Things common to all annuities Current income is tax deferred Issued by life insurance companies Provide income you cannot outlive provisions ( annuitization( annuitization ) Treated similar to IRA s s for tax purposes (10% early withdrawal penalties on interest if withdrawn before age 59 ½)

9 How traditional fixed deferred annuities work Client purchases annuity with either a lump sum or series of payments Current interest is credited (usually daily) Client may take withdrawals from the annuity (usually 10-15% 15% annually) without penalty Penalties are assessed for exceeding the free out amount

10 How traditional fixed deferred annuities work Principal is guaranteed A minimum return (2-3%) is guaranteed Interest crediting methods differ among products Some are CD-like annuities, taken for a fixed term of years (usually illiquid)

11 How fixed deferred index annuities work Penalty period may last from years Principal may be only partially guaranteed (a common design is 3% on 90% of the money ) Costs are higher and more complex than for traditional fixed deferred annuities Penalties are assessed for exceeding the free out amount (if there is a free out provision)

12 How fixed deferred index annuities work Utilizing the free out amount usually destroys any index return, making this instrument a poor choice for liquidity Multiple crediting methods annual reset, point to point, high water mark, any of which may include monthly averaging In addition to surrender charges, additional costs generally apply

13 Practice applications Long term investing where liquidity is a minor factor As part of the bond component in an asset allocation program For a risk averse client who wants an opportunity for higher returns in a low interest rate environment

14 Suitability Red Flags for FIA s Putting most or all of a client s s money in an FIA Free out portion of the index annuity normally loses the index gain if withdrawn, making it a poor choice to meet liquidity needs Unreasonably long surrender periods or liquidity requirements (e.g., require annuitization)

15 How variable annuities work Is a security Money invested in market based subaccounts Has more risk than a fixed annuity Surrender charges similar to fixed annuities

16 How variable annuities work Risks may be managed by purchasing income guarantees Features a death benefit that may pay more than the annuity s s market value Generally will outperform fixed annuities over long periods of time

17 Practice applications for variable annuities Excellent alternative to non-deductible IRA s Better long term choice than a fixed annuity Can provide higher income for a client who has not done a good job of saving Good choice for wealth transfer for an uninsurable client

18 Suitability issues for variable annuities Can (and probably will!) lose value at some point, making it unsuitable for a risk averse client Is expensive, making it unsuitable for a client investing solely in low risk subaccounts (fixed annuity would be a better choice)

19 Annuitization Act of converting a deferred annuity to an income stream of some kind is called annuitizing Immediate annuities are annuitized at issue Buying a pension

25 Examples of Annuity Payouts $100,000 annuity, two spouses, age 60 Life only $ 789 Life only with 10 year certain 737 Joint Life and 50% survivor 708 Joint life and 100% survivor 664 Joint life and 50 survivor- 10 year certain 698 Joint life and 100% survivor- 10 year certain year certain 1, year certain 1,077

29 Disadvantages of Systematic Withdrawal Income Strategy Interest on pre-59 59½ withdrawals subject to 10% penalty Loss of favorable exclusion ratio taxation May run out of money!

30 Taxation of Annuity Withdrawals Last in, first out Must exhaust all the interest (taxable) before getting to principal (tax free)

31 Planning Technique Systematic Withdrawals Jerry, age 50 Has $500,000 to invest in annuities Wants flexibility between now and age 59 1/2

32 Planning Technique Systematic Withdrawals Option 1 Put $500,000 in one annuity Age 55 will have $500,000 principal, with $169,000 of taxable gain Must remove $169,000 to get at any tax or penalty free money

33 Planning Technique Systematic Withdrawals Option 2 Put $100,000 in five annuities Age 55 will have $500,000 principal, with $33,800 of taxable gain in each annuity Must remove only $33,800 to get at tax and penalty free money

45 The CLU Pledge In all my professional relationships, I pledge myself to the following rule of ethical conduct: I shall, in light of all conditions surrounding those I serve, which I shall make every conscientious effort to ascertain and understand, render that service which in the same circumstances I would apply to myself.

46 Summary The key to a suitable annuity sale is the fact finder (know your customer!) ALWAYS consider liquidity needs Is there a better solution? Do the right thing!

Annuities The Key to a Secure Retirement 1 Saving for retirement is crucial, and making sure those resources last throughout your lifetime is just as important. Annuities do both helping you save, then

Understanding Annuities: A Lesson in Indexed Annuities Did you know that an annuity can be used to systematically accumulate money for retirement purposes, as well as to guarantee a retirement income that

Annuity Principles and Concepts Session Five Lesson Two Annuity (Benefit) Payment Options Life Contingency Options - How Income Payments Can Be Made To The Annuitant. Pure Life versus Life with Guaranteed

The Individual Annuity a re s o u rc e i n yo u r r e t i r e m e n t an age of Decision Retirement today requires more planning than for previous generations. Americans are living longer many will live

Basic Facts about Variable Annuities Variable annuities are long-term investment vehicles that provide a unique combination of insurance and investment features. Fundamentally, a variable annuity is an

A CONSUMER S GUIDE TO Annuities Be secure and confident in the decisions you make Americans are living longer than ever before. How will they fund these extra years? There are many different approaches.

March 2013 The Basics of Annuities: Planning for Income Needs summary the facts of retirement Earning income once your paychecks stop that is, after your retirement requires preparing for what s to come

A GUIDE TO INVESTING IN ANNUITIES What Benefits Do Annuities Offer in Planning for Retirement? Oppenheimer Life Agency, Ltd. Oppenheimer Life Agency, Ltd., a wholly owned subsidiary of Oppenheimer & Co.

Annuity Distributions What are annuity distributions? How are annuity distributions made? How are your annuity payouts computed if you elect to annuitize? Who are the parties to an annuity contract? How

The Basics of Annuities: PLANNING FOR INCOME NEEDS TABLE OF CONTENTS Income Beyond the Paycheck...1 The Facts of Retirement...2 What Is an Annuity?...2 What Type of Annuity Is Right for Me?...2 Payment

Retirement today requires more planning than for previous generations. Americans are living longer many will live 20 to 30 years or more in retirement. Finding a way to make savings last over such a long

Palladium Single Premium Immediate Annuity With Cost Of Living Adjustment Income For Now... Guaranteed Income For Life! A Single Premium Immediate Annuity Issued By Income for Your Needs Now and in the

{ INCOME PLANNING FOR YOUR LIFETIME. } THE FACTS ON ANNUITIES ANNUITIES: INCOME PLANNING FOR YOUR LIFETIME Whether you are dreaming of golfing in Arizona or traveling around the world, a financially comfortable

Life Insurance Client Guide The Art of Retirement Is Your Financial Portfolio an Unfinished Work? Color It with a Life Insurance Retirement Plan Protection Now, Income Later AD-OC-770D 1 Picture Your Future

Chapter 19 Retirement Products: Annuities and Individual Retirement Accounts Overview Thus far we have examined life insurance in great detail. Life insurance companies also market a product that addresses

Guide to buying annuities Summary of the key points contained in this disclosure document Before you purchase your annuity contract, make sure that you read and understand this guide. While reading this

Payouts. Protection. In One Place. ING Single Premium Immediate Annuity issued by ING USA Annuity and Life Insurance Company Your future. Made easier. Payouts. Protection. In today s financial world, some

2 Your pension benefit options Traditional pension plans generally provide the option of a lump-sum payment or a fixed monthly payment for life through an annuity. The fixed monthly payment amount is usually

ab Wealth Management Americas Understanding annuities Rethinking the role they play in retirement income planning Protecting your retirement income security from life s uncertainties. The retirement landscape

Voya Single Premium Immediate Annuity issued by Voya Insurance and Annuity Company Payouts. Protection. In One Place. Payouts. Protection. In One Place. In today s financial world, some products provide

Buyer s Guide for Deferred Annuities Variable Prepared by the NAIC National Association of Insurance Commissioners This guide does not endorse any company or policy Reprinted by John Hancock Life Insurance

U.S. INVESTMENT POLICY GUIDANCE REPORT Making Your Money Last Everyone has individual retirement goals, but we all have one in common: ensuring our money lasts throughout retirement. Even a well-designed

Guide to buying annuities Summary of the key points contained in this disclosure document Before you purchase your annuity contract, make sure that you read and understand this guide. While reading this

SUN LIFE FINANCIAL S GUIDE TO UNDERSTANDING ANNUITIES How can an annuity help with retirement PLANNING? You ve done a good job planning for retirement and have taken advantage of a 401(k) or IRA. You know

Variable annuities A tax-advantaged way to save for retirement Common terms Annuitant The person (may be the same as the contract owner) whose life expectancy is used to calculate the income payment amount

Voya Single Premium Immediate Annuity issued by Voya Insurance and Annuity Company Payouts. Protection. In One Place. Payouts. Protection. In One Place. In today s financial world, some products provide

Buyer s Guide for Deferred Annuities Fixed Table of Contents What Is an Annuity?...2 When Annuities Start to Make Income Payments... 2 How Deferred Annuities Are Alike... 2 How Deferred Annuities Are Different...

Variable Annuity Suitability Form P.O. Box 64284, St. Paul, MN 55164 (800) 800-2638 woodburyfinancial.com This submission must contain the items listed below. If any of the following items in this submission

CB50330 Page 1 of 6 Cash Bonus Elite How would you like to enjoy up to 10% immediate growth on your money plus, up to 10% immediate growth on all additional payments made in the next 10 years? An exceptional

What is an annuity? The basics Part 1 of 8 You may be considering an annuity, and, if that s the case, it is important that know what an annuity is and isn t. Basically, an annuity is a contract with an

ING Lifetime Income Income when it counts. A single premium deferred fixed annuity income solution issued by ING USA Annuity and Life Insurance Company. Your future. Made easier. Paycheck, salary, livelihood

An Insider s Guide to Annuities Whatever your picture of retirement, the best way to get there and enjoy it once you ve arrived is with a focused, thoughtful plan. Introduction 2 What is an Annuity?...

Wealth Management Americas Understanding annuities Rethinking the role they play in retirement income planning Helping to protect your retirement income security from life s uncertainties. The retirement

CALIFORNIA ANNUITY TRAINING 4 HOURS 1. A producer s obligation to ensure that an annuity is suitable ends. A. when the customer signs the application B. when the customer pays the first premium C. when

Robert W. Baird & Co. Incorporated Important Information about your Annuity Annuities are long-term investments that may help you meet or supplement your retirement and other long-term goals. Annuities

BUYER S GUIDE TO FIXED DEFERRED ANNUITIES Prepared by the National Association of Insurance Commissioners The National Association of Insurance Commissioners is an association of state insurance regulatory

Part IX There are many good retirement plans available to the investor, but annuities offer a big advantage a whole new dimension to retirement assets that one should consider, no matter how much money

ANNUITIES: WHAT ARE THEY AND HOW ARE THEY USED (FORC Journal: Vol. 18 Edition 1 - Spring 2007) 1 An annuity is a contract under which the owner of the contract pays money or transfers assets to the obligor

Annuities 101 What is an annuity Type of Annuities How to get started What is an Annuity? An annuity is a long-term (often 5 years or more), interest-paying contract offered through an insurance company.

Voya Lifetime Income Income when it counts. A single premium deferred fixed annuity income solution issued by Voya Insurance and Annuity Company. Paycheck, salary, livelihood No matter what you call it,

Excerpts from IRI Annuity Fact Book Variable Annuity 101 An annuity is often viewed as life insurance in reverse. Whereas life insurance protects an individual against premature death, an annuity protects

Guardian Variable Annuities, The Guardian Variable Annuities, The ABC...123 Story If history is any guide, the only constant is change. And with the recent volatility in the markets, many investors are

Understanding Annuities Annuities ARE NOT INSURED BY FDIC OR ANY FEDERAL GOVERNMENT AGENCY MAY LOSE VALUE ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE IFS-A092313 Ed. 01/2005 Letter

Palladium Immediate Annuity - NY Income For Now... Income For Life! A Single Premium Immediate Fixed Annuity Product of Income A Guaranteed Income for as Long as You Need It One of the major fears we face

Protection Now. Income Later. Life Insurance Retirement Plan for Women AD-OC-749C What are two problems facing today s woman? 1 2 The Family s Financial Vulnerability. Whether you are part of a two-income

BUYER S GUIDE TO FIXED DEFERRED ANNUITIES IT IS IMPORTANT that you understand the differences among various annuities so you can choose the kind that best fits your needs. This guide focuses on fixed deferred

NAIC Buyer s Guide for Deferred Annuities Prepared by the National Association of Insurance Commissioners The National Association of Insurance Commissioners is an association of state insurance regulatory

The term annuity derives from a Latin term meaning annual and generally refers to any circumstance where principal and interest are liquidated through a series of regular payments made over a period of

The term annuity derives from a Latin term meaning annual and generally refers to any circumstance where principal and interest are liquidated through a series of regular payments made over a period of

Annuitization and the retirement income it provides Retirement made easier: How annuity income can simplify your retirement hij abc What annuities and life insurance have in common Annuities are a form

5 Year Product Applications for the FG Guarantee-Platinum 5 year product must be submitted electronically. Please log on to Saleslink for additional details at https://www.fglife.com. Fidelity & Guaranty

Rules for Taking Distributions from Tax-Deferred Retirement Savings Plans Putting money into an employer s retirement plan or IRA is just the first step toward financial security in retirement. How you

Buyer s Guide for Deferred Annuities Table of Contents What Is an Annuity?... 1 When Annuities Start to Make Income Payments... 1 How Deferred Annuities Are Alike... 1 How Deferred Annuities Are Different...

ANNUITIES MassMutual Single Premium Immediate Annuity Retirement Can Be An Exciting Journey INVEST INSURE RETIRE Peter and Gail Doherty will celebrate their 40th wedding anniversary later this year. When

3/15 23203-15A Annuity Distribution Options for Your Beneficiaries Getting Started Beneficiary distribution options tied to annuity assets may differ depending on the types of retirement assets as well

Freedom Variable Annuity Variable Product Series Building your future with a secure partner SM Kansas City Life Insurance Company Freedom Variable Annuity features at a glance Minimum deposit $25,000 minimum

REVIEWING YOUR TIAA-CREF INCOME CHOICES A GUIDE TO YOUR PAYMENT OPTIONS FLEXIBILITY & CHOICE TIAA-CREF UNDERSTANDS YOUR FINANCIAL PRIORITIES can change over time, which is why we offer you a wide range

for a secure Retirement Lifetime Income Benefit Rider (LIBR-2010)* Included automatically on most Fixed Indexed Annuities** for use with Fixed Indexed Annuities *May vary by state. Not available in all

Understanding annuities An Overview for Your Retirement No bank guarantee Not a deposit May lose value Not FDIC/NCUA insured Not insured by any federal government agency 2/15 13096-15A Contents Get Ready

Buyer s Guide for Deferred Annuities Prepared by the NAIC National Association of Insurance Commissioners The National Association of Insurance Commissioners is an association of state insurance regulatory

The term annuity refers to any situation where principal and interest are paid out in a series of regular payments. A nonqualified annuity, generally, is an annuity purchased by an individual from a life

Variable Annuity Variable Product Series Building your future with a secure partner SM Kansas City Life Insurance Company Variable Annuity Features at a Glance Minimum Deposit $5,000 minimum single deposit

Glossary of Annuity Product Terms A A-Share Variable Annuities Annuity contracts in which sales charges are incurred at time of investment or premium payment. A-share contracts typically have no surrender